Datasea Inc.
(NASDAQ: DTSS)
(“Datasea” or the “Company”), a technology company
engaged in providing smart security solutions and developing
education-related technologies in China, reported results for the
fiscal third quarter and nine months ended March 31, 2020.
Third Quarter 2020 Financial and Recent
Highlights:
- Secured 33 purchase orders for Datasea’s customized hardware
and proprietary software solutions that are being utilized in
public spaces on campuses, shopping malls, scenic areas,
residential areas, and factories, with cash inflow from customers
in full amount.
- Commenced a six-location pilot program with K-12 schools and
public communities in Nanjing and Taiyuan, to provide infrared
thermometers and related hardware & software solutions aimed at
detecting outbreaks, and completed the installation of the Epidemic
Prevention and Control Systems in two K-12 schools, as the first
part of the Company’s six-location pilot program.
- Signed 17 new agreements since April 1, 2020 with various K-12
schools to deploy intelligent campus security systems.
- Signed 12 new agreements since April 1, 2020 to deploy
intelligent public community security systems.
Management Commentary
“In the fiscal third quarter 2020 we continued to make
significant progress on our mission of enhancing the safety of the
communities where we inhabit and work,” said Ms. Zhixin Liu,
Chairwoman and CEO of Datasea. “Our organization’s unwavering
commitment to our mission was evidenced in the third quarter of
2020 in our ability to focus our efforts on development and launch
our Epidemic Prevention and Control System (the “System”). This
System enhances the efficiency of community managers and provides a
safer and more transparent work environment. The 45 purchase orders
for this System that we have received to date represent a solid
effort in our commercialization efforts for this product, giving us
confidence going forward. In the educational market, we managed to
secure 17 new agreements with K-12 schools since April, which we
believe reflects the growing need for our solutions. We intend to
direct our proprietary technology, sales channels, and operational
momentum to help us to capitalize on future opportunities.”
Fiscal Third Quarter 2020 Financial Results
The Company did not generate any revenue in the fiscal third
quarter of 2020 or during the same period one year ago.
Selling expense was $33,000 as compared to $34,000 in the same
period one year ago. The decrease was primarily driven by lower
salary expenses, and partly offset by higher travel expenses in the
period.
General and administrative expenses decreased to $428,000 from
$511,000 in the same year-ago period. The decrease was primarily
due to the Company’s ongoing cost and expense management
initiatives.
Research and development expenses increased to $109,000 from
$29,000 in the same period one year ago. The increase was primarily
due to investment in additional research and development personnel
in the period.
Net loss totaled $(557,000), or $(0.03) per diluted share, as
compared to net loss of $(343,000), or $(0.03) per diluted share,
in the same period one year ago.
Fiscal Nine Months 2020 Financial Results
The Company did not generate any revenue in the first nine
months of 2020 or the comparable period last year.
Selling expense decreased to $143,000 from $183,000 in the same
year-ago period. The decrease was primarily driven by lower salary
expenses, and partly offset by higher travel expenses in the
period.
General and administrative expense increased to $1.4 million
from $1.0 million in the same year-ago period. The increase was
primarily due to higher rent expenses and professional fees.
Research and development expenses increased to $230,000 from
$133,000 in the same year-ago period. The increase was primarily
due to investment in additional research and development personnel
in the period.
Net loss totaled $(1.7) million, or $(0.08) per diluted share,
compared to net loss of $(1.3) million or $(0.06) per diluted
share, in the same year-ago period.
About Datasea Inc.
Datasea is a technology company in China engaged in providing
smart security solutions and developing education-related
technologies. Datasea leverages its proprietary technologies,
intellectual property, innovative products and market intelligence
to provide comprehensive and optimized security solutions and
education-related technologies to its clients. Datasea has been
certified as one of the Zhongguancun High Tech Enterprises in
recognition of its achievement in high technology products.
Datasea's security and technology engineers and experts create,
design, build and run various security systems and education
technologies tailored to its clients' needs. Through its
professional team and strong expertise in the industry, Datasea
offers its clients a broad portfolio of security solutions, along
with strategic advice and ongoing management of their security
infrastructure, and digital education tools or programs. For
additional company information, please
visit: www.shuhaixinxi.com.
Cautionary Note Regarding Forward-Looking
Statements This press release contains forward-looking
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934 and as defined in the U.S. Private Securities
Litigation Reform Act of 1995. These forward-looking statements can
be identified by terminology such as "will," "expects,"
"anticipates," "future," "intends," "plans," "believes,"
"estimates," "target," "going forward," "outlook" and similar
statements. Such statements are based upon management's current
expectations and current market and operating conditions, and
relate to events that involve known or unknown risks, uncertainties
and other factors, all of which are difficult to predict and many
of which are beyond Datasea's control, which may cause Datasea's
actual results, performance or achievements (including, without
limitation, the performance and related results of operations
arising from Datasea’s contracts and products addressed in this
press release) to differ materially and in an adverse manner from
anticipated results contained or implied in the forward-looking
statements. Further information regarding these and other risks,
uncertainties or factors is included in Datasea's filings with the
U.S. Securities and Exchange Commission, which are available
at www.sec.gov. Datasea does not undertake any obligation to
update any forward-looking statement as a result of new
information, future events or otherwise, except as required under
the law.
DATASEA INC.CONSOLIDATED
BALANCE SHEETS
|
|
March 31, 2020 |
|
|
June 30, 2019 |
|
|
|
(Unaudited) |
|
|
(Audited) |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
Cash |
|
$ |
2,010,811 |
|
|
$ |
6,072,637 |
|
Restricted cash |
|
|
600,000 |
|
|
|
600,000 |
|
Inventory |
|
|
272,749 |
|
|
|
73,294 |
|
Value-added tax prepayment |
|
|
70,534 |
|
|
|
- |
|
Prepaid expenses and other current assets |
|
|
491,913 |
|
|
|
105,932 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
3,446,007 |
|
|
|
6,851,863 |
|
|
|
|
|
|
|
|
|
|
NONCURRENT ASSETS |
|
|
|
|
|
|
|
|
Fixed assets, net |
|
|
252,315 |
|
|
|
41,116 |
|
Intangible assets, net |
|
|
1,948,882 |
|
|
|
555,811 |
|
Right-of-use assets, net |
|
|
758,162 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total noncurrent assets |
|
|
2,959,359 |
|
|
|
596,927 |
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS |
|
$ |
6,405,366 |
|
|
$ |
7,448,790 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
46,768 |
|
|
$ |
13,088 |
|
Advances from customers |
|
|
1,361,134 |
|
|
|
1,318,897 |
|
Accrued expenses and other payables |
|
|
178,779 |
|
|
|
264,684 |
|
Loan payable to shareholder |
|
|
- |
|
|
|
86,733 |
|
Operating lease liabilities |
|
|
348,401 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
1,935,082 |
|
|
|
1,683,402 |
|
|
|
|
|
|
|
|
|
|
NONCURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Operating lease liabilities |
|
|
421,558 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total noncurrent assets |
|
|
421,558 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
2,356,640 |
|
|
|
1,683,402 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 375,000,000 shares authorized,
20,943,846 shares issued and outstanding at March 31, 2020 and June
30, 2019 |
|
|
20,944 |
|
|
|
20,944 |
|
Additional paid-in capital |
|
|
11,104,666 |
|
|
|
11,104,666 |
|
Accumulated comprehensive income |
|
|
179,000 |
|
|
|
189,906 |
|
Accumulated deficit |
|
|
(7,255,884 |
) |
|
|
(5,550,128 |
) |
|
|
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS’ EQUITY |
|
|
4,048,726 |
|
|
|
5,765,388 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
$ |
6,405,366 |
|
|
$ |
7,448,790 |
|
DATASEA INC.CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS(Unaudited)
|
|
NINE MONTHS ENDED |
|
|
THREE MONTHS ENDED |
|
|
|
March 31, 2020 |
|
|
March 31, 2019 |
|
|
March 31, 2020 |
|
|
March 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Cost of goods sold |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling |
|
|
142,605 |
|
|
|
183,240 |
|
|
|
33,284 |
|
|
|
34,388 |
|
General and administrative |
|
|
1,373,837 |
|
|
|
1,013,136 |
|
|
|
428,227 |
|
|
|
510,983 |
|
Research and development |
|
|
229,511 |
|
|
|
133,103 |
|
|
|
109,146 |
|
|
|
29,218 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
1,745,953 |
|
|
|
1,329,479 |
|
|
|
570,657 |
|
|
|
574,589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(1,745,953 |
) |
|
|
(1,329,479 |
) |
|
|
(570,657 |
) |
|
|
(574,589 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income, net |
|
|
(3,632 |
) |
|
|
(2,571 |
) |
|
|
2,784 |
|
|
|
894 |
|
Interest income |
|
|
43,828 |
|
|
|
47,114 |
|
|
|
10,134 |
|
|
|
32,696 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-operating income,
net |
|
|
40,196 |
|
|
|
44,543 |
|
|
|
12,918 |
|
|
|
33,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
Loss before income tax |
|
|
(1,705,757 |
) |
|
|
(1,284,936 |
) |
|
|
(557,739 |
) |
|
|
(540,999 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(1,705,757 |
) |
|
|
(1,284,936 |
) |
|
|
(557,739 |
) |
|
|
(540,999 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive item |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
gain (loss) |
|
|
(10,906 |
) |
|
|
222,332 |
|
|
|
719 |
|
|
|
198,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss |
|
$ |
(1,716,663 |
) |
|
$ |
(1,062,604 |
) |
|
$ |
(557,020 |
) |
|
$ |
(342,790 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.08 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
20,943,846 |
|
|
|
19,845,627 |
|
|
|
20,943,846 |
|
|
|
20,943,846 |
|
DATASEA INC.CONSOLIDATED
STATEMENTS OF CASH FLOWS(Unaudited)
|
|
Nine Months Ended |
|
|
|
March 31, 2020 |
|
|
March 31, 2019 |
|
|
|
|
|
|
|
|
Cash flows from
operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(1,705,757 |
) |
|
$ |
(1,284,936 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
38,536 |
|
|
|
28,285 |
|
Operating lease expense |
|
|
113,211 |
|
|
|
- |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Inventory |
|
|
(204,186 |
) |
|
|
279 |
|
Prepaid expenses and other current assets |
|
|
(394,017 |
) |
|
|
12,099 |
|
Accounts payable |
|
|
34,500 |
|
|
|
- |
|
Advance from customers |
|
|
83,889 |
|
|
|
- |
|
Accrued expenses and other payables |
|
|
(13,338 |
) |
|
|
(44,790 |
) |
Taxes payable |
|
|
(105,098 |
) |
|
|
- |
|
Payment on operating lease liabilities |
|
|
(132,953 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Net cash used in operating
activities |
|
|
(2,285,214 |
) |
|
|
(1,289,063 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
Acquisition of fixed assets |
|
|
(248,333 |
) |
|
|
(64,531 |
) |
Acquisition of intangible assets |
|
|
(1,400,000 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Net cash used in investing
activities |
|
|
(1,648,333 |
) |
|
|
(64,531 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
Payment of loan payable - shareholder, net |
|
|
(85,091 |
) |
|
|
(15,392 |
) |
Net proceeds from sale of common stock - offering |
|
|
- |
|
|
|
5,240,889 |
|
Net proceeds from issuance of common stock |
|
|
- |
|
|
|
308,858 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in)
financing activities |
|
|
(85,091 |
) |
|
|
5,534,355 |
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash |
|
|
(43,189 |
) |
|
|
129,722 |
|
|
|
|
|
|
|
|
|
|
Net (decrease)
increase in cash and restricted cash |
|
|
(4,061,826 |
) |
|
|
4,310,483 |
|
|
|
|
|
|
|
|
|
|
Cash and restricted
cash, beginning of period |
|
|
6,672,637 |
|
|
|
1,031,486 |
|
|
|
|
|
|
|
|
|
|
Cash and restricted
cash, end of period |
|
$ |
2,610,811 |
|
|
$ |
5,341,969 |
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
- |
|
|
$ |
- |
|
Cash paid for income tax |
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of non-cash investing and financing
activities: |
|
|
|
|
|
|
|
|
Right-of-use assets obtained
in exchange for new operating lease liabilities |
|
$ |
875,366 |
|
|
$ |
- |
|
Investor Relations Contact:
Gateway Investor Relations
Matt Glover
DTSS@gatewayir.com
949-574-3860
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